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End of road for sharing?

18th December 1997
Page 25
Page 25, 18th December 1997 — End of road for sharing?
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Which of the following most accurately describes the problem?

Several key transport players have recently decided to ditch shared-user work. If the trend continues, smaller hauliers could well be the winners. Why has the dream turned sour?

by Sally Nash • Regional hauliers around the country are picking up work following the collapse of shareduser operations among several big names such as the Lane Group which announced it was pulling the plug just before Christmas.

A few years ago shared-user was heralded as having great potential—the pundits declared that customers' costs would be slashed and there would be fewer lorry journeys. Even now the Freight Transport Association is still championing its cause maintaining it is one way the haulage industry can become more environmentally friendly. So what went wrong?

BOC Distribution was the first of the big boys to shy away from shared-user but then just gm a few months ago the Transport Development Group finally held up the white flag after trying to make the operation work for five years.

Just before Christmas Bristol-based Lane Group made the surprise announcement that it too would be pulling out, blaming the move on a slump in demand for shared-user.

According to TDG, expectations were high about its use— perhaps unreasonably high. "Everyone said shared-user was where everyone needed to be but there is just no money in it," says Francis Peck, divisional development director, consumer at TDG. "We ran it for about five years in various formats but never made money from it."

When TDG did pull the plug, some of the smaller customers turned to regional hauliers to fill the gap, says Peck.

He concedes that shared-user can still be a viable option if it runs on a milk-run type schedule and points to the likes of Palletline and Bibby Distribution which both run successful networks like this.

Unrealistic

But even Bibby Distribution warns that some customers might have an unrealistic view, seeing it as a cheap panacea to all their distribution problems. "But you don't get anything of value for nothing," says the company.

One unnamed operator says that BOC, the Lane Group and TDG all made the mistake of going for volume and judged success in terms of turnover. He claims the danger is that shareduser becomes the poor relation which then "attracts all the rubbish and falls over".

You can also come unstuck if you try to handle incompatible loads and traffic flows in the same operation, he warns.

David Hindson, from Exel Logistics, insists that it is not just a case of whether to use shared-user or not but how you run a logistics business.

The method favoured in the past—put your assets in place such as depots, vehicles and systems and then go out and sell the service, is in many cases unprofitable. It is better, argues Hindson, to do the opposite— sell the service then acquire the assets.

Hindson points to the example of the joint Bass/Exel Logistics operation Tradeteam, which brings similar pub groups together. But any shared-user network has to be highly focused and made up of small alliances, he adds. An operation dealing with about five to 10 firms with compatible needs could be made to work, believes Hindson.

Strategic

However, Wincanton Logistics maintains that its shared-user business has given a good return and sees the future in building strategic alliances for manufacturers and retailers.

While some operators turn their backs on shared-user, others insist the future is bright.

Jon Hyatt, business unit director at Wincanton Logistics, is one of them. "We certainly don't think shared-user is dead."


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